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China's changing energy intensity trend: A decomposition analysis

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  • Ma, Chunbo
  • Stern, David I.

Abstract

China experienced a dramatic decline in energy intensity from the onset of economic reform in the late 1970s until 2000, but since then the rate of decline slowed and energy intensity actually increased in 2003. Most previous studies found that most of the decline was due to technological change, but disagreed on the role of structural change. To the best of our knowledge, no decomposition study has investigated the role of inter-fuel substitution in the decline in energy intensity or the causes of the rise in energy intensity since 2000. In this paper, we use logarithmic mean Divisia index (LMDI) techniques to decompose changes in energy intensity in the period 1980-2003. We find that: (1) technological change is confirmed as the dominant contributor to the decline in energy intensity; (2) structural change at the industry and sector (sub-industry) level actually increased energy intensity over the period of 1980-2003, although the structural change at the industry level was very different in the 1980s and in the post-1990 period; (3) structural change involving shifts of production between sub-sectors, however, decreased overall energy intensity; (4) the increase in energy intensity since 2000 is explained by negative technological progress; (5) inter-fuel substitution is found to contribute little to the changes in energy intensity.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 30 (2008)
Issue (Month): 3 (May)
Pages: 1037-1053
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Handle: RePEc:eee:eneeco:v:30:y:2008:i:3:p:1037-1053

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  1. Fisher-Vanden, Karen & Jefferson, Gary H. & Liu, Hongmei & Tao, Quan, 2004. "What is driving China's decline in energy intensity?," Resource and Energy Economics, Elsevier, vol. 26(1), pages 77-97, March.
  2. Cleveland, Cutler J. & Kaufmann, Robert K. & Stern, David I., 2000. "Aggregation and the role of energy in the economy," Ecological Economics, Elsevier, vol. 32(2), pages 301-317, February.
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Cited by:
  1. Chu Wei & Man-hong Shen, 2009. "What is the driving force of the energy productivity? Evidence from China," Frontiers of Economics in China, Springer, vol. 4(2), pages 265-273, June.
  2. Åsa Löfgren & Adrian Muller, 2010. "Swedish CO2 Emissions 1993–2006: An Application of Decomposition Analysis and Some Methodological Insights," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 47(2), pages 221-239, October.
  3. Zhang, Xing-Ping & Cheng, Xiao-Mei & Yuan, Jia-Hai & Gao, Xiao-Jun, 2011. "Total-factor energy efficiency in developing countries," Energy Policy, Elsevier, vol. 39(2), pages 644-650, February.
  4. Schön, Lennart & Kander, Astrid, 2007. "Industrial dynamics and innovative pressure on energy - Sweden with European and Global outlooks," CIRCLE Electronic Working Papers 2007/5, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.

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